Money: The latest status symbol - a gold card from the Co-op

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The Independent Online
The battle for customers in the lucrative gold card market intensified this week with the launch of a low-cost card by Co-operative Bank, which claims to offer the best rate on the market.

The Advantage card will have an initial rate of 7.9 per cent APR, fixed until April. Thereafter, the card will move to a standard variable rate of 10.9 per cent APR.

Co-operative Bank says that, unlike some competitors, which revert to a higher rate for new purchases, its low-start rate will apply not only to transfers but also to all outstanding balances until the end of March.

The card, which has no annual fee and no interest-free period, is aimed at people likely to leave an amount outstanding each month.

Simon Williams, head of marketing at Co-operative Bank, says: "We realise there is a significant proportion of the population who regularly borrow on their credit cards. For those people, the traditional card with an interest-free period is of no use whatsoever. It is far more important to have a card with a lower rate."

The Co-op's new card comes amid a growing number of gold card launches. Despite the continuing appearance of a range of ordinary credit cards, many observers feel that market is "mature", yielding few opportunities for growth.

Attention has turned instead to gold cards, whose users are felt to be more affluent - the typical minimum earnings requirement is pounds 20,000 - and needing greater personal service. Status-seeking is perceived as another reason for the flood of gold card applications.

Research by Mintel shows the number of gold cards in circulation has rocketed from 800,000 just four years ago to more than 2.5 million today.

The average amount spent by gold card users is more than pounds 2,350 a year, compared with pounds 1,330 for ordinary cards. There are now 25 gold cards in issue, compared with four in 1993.

Two weeks ago, American Express joined the fray with a gold credit card charging 15.9 per cent APR, one of the lowest rates on the market. To sweeten its offer still further, Amex is offering an introductory rate of 12.6 per cent for six months.

Unlike the Co-operative Bank Advantage card, American Express offers a 56-day interest-free credit period. Other competitive gold cards include Lloyds Bank and Nationwide, both charging 17.2 per cent APR on purchases.

Sainsbury's, one of the most recent entrants, charges 16.5 per cent. The Au card, issued by Royal Bank of Scotland, charges 13.9 per cent APR on both purchases and cash withdrawals, also coupled with a 56-day interest- free credit period.

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